HOUSTON, Nov. 21, 2013 /PRNewswire/ -- Cyberonics, Inc. (NASDAQ: CYBX) today announced results for the quarter ended October 25, 2013.
Quarterly highlights Operating results for the second quarter of fiscal 2014 compared to the second quarter of fiscal 2013, and other achievements, include:
The financial and operating results for the fiscal quarter ended October 26, 2012 include a $1.3 million gain on warrant liability. The impact of this gain has been excluded for the purposes of non-GAAP comparisons between the fiscal quarter ended October 25, 2013 and the fiscal quarter ended October 26, 2012. As discussed below under "Use of Non-GAAP Financial Measures," in this release, the company refers to and makes comparisons with certain non-GAAP financial measures including adjusted non-GAAP net income, and adjusted non-GAAP income per diluted share. Investors should consider non-GAAP measures in addition to, and not as a substitute for or superior to, financial performance measures prepared in accordance with GAAP. Please refer to the attached non-GAAP reconciliation. Numbers may be affected by rounding.Results and objectives"The second quarter of fiscal 2014 was another record quarter for sales, operating income and income per diluted share," commented Dan Moore, Cyberonics' President and Chief Executive Officer. "Our U.S. sales team provided another strong performance with a record quarter in both unit sales and net product sales. Our estimates suggest that new patient additions in absolute numbers were the highest in eight years, while estimates of replacement growth rates are consistent with those provided in our annual guidance.
"International unit sales were well ahead of the second quarter of last year, with Europe continuing to deliver unit growth in double digits. Foreign exchange movements favorably impacted sales for the second quarter of fiscal 2014 by approximately $200,000 compared to the second quarter of fiscal 2013. On a constant currency basis, the increase in international sales was 8.5%, with a higher proportion of our international sales coming from distributors.
"Adjusted EBITDA for the second quarter was $26 million, and our balance sheet remains healthy, with available cash and short-term investments of $123 million.
"We are particularly pleased to have delivered on one of our key product development goals for fiscal 2014 with the submission this quarter of the AspireSR generator for regulatory approval in Europe. This regulatory filing marks an important milestone for the entire product development team. We continued to enroll patients in the first phase of our E-37 U.S. clinical study for the AspireSR generator and expect to complete enrollment by the end of the fiscal year.
"Significant and positive product development work continued on both the Relay™ and ProGuardian™ platform technologies during the quarter, and our product development investment is likely to be higher in the third quarter as we strive to bring these products to submission-ready status. As previously advised, we completed enrollment in the ANTHEM-HF study assessing Autonomic Regulation Therapy (ART™) for patients with chronic heart failure in the first quarter. We plan to determine next steps in this program once the six month follow-up results are available," concluded Mr. Moore.
Stock Repurchase UpdateDuring the recently completed quarter, Cyberonics repurchased 480,000 shares on the open market, leaving 260,000 shares available to be repurchased under the current program, which is expected to be completed in the current fiscal year.
Fiscal 2014 guidanceCyberonics is increasing guidance for fiscal 2014 as follows:
Guidance for income from operations, net income and diluted earnings per share (EPS) was adjusted by $7.4 million, $4.8 million (net of tax) and $0.17 cents per share respectively, for the litigation settlement recorded in the first quarter of fiscal 2014.
Additional details will be provided during today's conference call and in an investor presentation summarizing the company's first quarter results, which is available in the investor relations section of Cyberonics' corporate website at http://www.cyberonics.com.
Use of non-GAAP financial measuresIn this press announcement, management has disclosed financial measurements that present financial information not in accordance with Generally Accepted Accounting Principles (GAAP). These measurements are not a substitute for GAAP measurements, although company management uses these measurements as aids in monitoring the company's ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies. Adjusted non-GAAP income from operations, adjusted non-GAAP net income and adjusted non-GAAP income per diluted share measure the income from operations, net income and income per diluted share of the company excluding unusual items. Management uses and presents these measures because management believes that such adjustments facilitate an understanding of the financial impact of unusual items on the company's short- and long-term financial trends. Management also uses adjusted non-GAAP items to forecast and to evaluate the operational performance of the company, as well as to compare results of current periods to prior periods on a consistent basis. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) measures the adjusted non-GAAP income from operations of the company and excludes the aforementioned items, as well as non-cash equity compensation and other income (expense) items.
Non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly-titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
Please refer to the attached reconciliations between GAAP and non-GAAP financial measures.
Second Quarter Results Webcast and Conference Call InstructionsCyberonics will host a conference call today, November 21, 2013, beginning at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to review its results of operations for the fiscal year 2014 second quarter, followed by a question and answer session.
The conference call will be available to interested parties through a live audio webcast in the Investor Relations section of Cyberonics' corporate website at http://www.cyberonics.com. To listen to the conference call live by telephone, dial 877-638-4557 (if dialing from within the U.S.) or 914-495-8522 (if dialing from outside the U.S.). The conference ID is 74273779.
Within 24 hours of the webcast, a replay will be available under the "Events & Presentations" section of the Investor Relations portion of the Cyberonics website, where it will be archived and accessible for approximately 12 months.
About Cyberonics, Inc. and the VNS Therapy® SystemCyberonics, Inc. is a medical technology company with core expertise in neuromodulation. The company developed and markets the VNS Therapy System, which is FDA-approved for the treatment of refractory epilepsy and treatment-resistant depression. The VNS Therapy System uses an implanted medical device that delivers pulsed electrical signals to the vagus nerve. Cyberonics offers the VNS Therapy System in selected markets worldwide.
Additional information on Cyberonics and the VNS Therapy System is available at www.cyberonics.com.
Safe harbor statementThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," or other similar words. Statements contained in this press release are based on information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information if those facts change or if we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning completing enrollment of the E-37 clinical study by fiscal year end, increasing our product development expenditure in the third quarter, bringing the Relay and ProGuardian products to submission-ready status by fiscal year end, completing our current stock repurchase program by fiscal year end, and financial guidance for fiscal 2014. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy™ and sales of our products; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of new products, including VNS Therapy™ for the treatment of other indications; satisfactory completion of the post-market registry required by the U.S. Food and Drug Administration as a condition of approval for the treatment-resistant depression indication; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new products and indications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the potential identification of material weaknesses in our internal controls over financial reporting; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to our most recent filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 26, 2013 and our Quarterly Report on Form 10Q for the fiscal quarter ended July 26, 2013.
Contact informationGreg Browne, CFO
100 Cyberonics Blvd.
Houston, TX 77058
Main: (281) 228-7262
Fax: (281) 218-9332
CYBERONICS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME(Unaudited)For the Thirteen Weeks EndedFor the Twenty-Six Weeks EndedOctober 25, 2013October 26, 2012October 25, 2013October 26, 2012Net sales
123,276,816Cost of sales6,926,1065,169,80413,470,13910,180,981Gross profit63,175,01357,785,841125,503,337113,095,835Operating expenses:Selling, general and administrative29,633,92527,569,48058,940,19555,892,796Research and development11,653,45010,042,41623,628,61519,761,719Litigation settlement--7,442,847-Total operating expenses41,287,37537,611,89690,011,65775,654,515Income from operations21,887,63820,173,94535,491,68037,441,320Interest income45,66712,42689,08219,505Interest expense(159)(59,988)(159)(88,773)Other income (expense), net(40,782)1,202,443(171,473)(2,788,977)Income before income taxes21,892,36421,328,82635,409,13034,583,075Income tax expense 8,003,9027,761,92212,846,74212,941,138Net income
21,641,937Basic income per share
0.78Diluted income per share
0.77Shares used in computing basic income per share27,274,17227,649,10327,393,68027,571,261Shares used in computing diluted income per share27,579,00728,063,19927,713,95427,995,630 CYBERONICS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited except where indicated)October 25, 2013April 26, 2013(Audited)ASSETSCurrent AssetsCash and cash equivalents
120,708,572Short-term investments24,990,38915,000,000Accounts receivable, net42,250,11839,450,113Inventories18,088,31717,718,454Deferred tax assets11,459,59710,297,991Other current assets4,247,6464,183,213Total Current Assets198,772,644207,358,343Property, plant and equipment, net35,612,59128,555,742Intangible assets, net12,092,0029,219,999Long-term investments10,588,20210,588,202Deferred tax assets8,023,0917,825,286Other assets594,074495,738Total Assets
264,043,310LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payables and accrued liabilities
29,025,478Total Current Liabilities25,087,03529,025,478Long-term Liabilities4,596,8505,449,604Total Liabilities29,683,88534,475,082Total Stockholders' Equity235,998,719229,568,228Total Liabilities and Stockholders' Equity
264,043,310 CYBERONICS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)For the Twenty-Six Weeks EndedOctober 25, 2013October 26, 2012Cash Flow From Operating Activities:Net income
21,641,937Non-cash items included in net income:Depreciation2,039,6321,901,737Amortization666,997415,850Stock-based compensation5,749,3686,846,188Deferred income tax(1,499,571)11,279,443Deferred license revenue amortization(1,467,869)(746,984)Impairment of investment-4,058,768Gain on warrant liability-(1,327,686)Other(3,258)136,713Changes in operating assets and liabilities:Accounts receivable, net(2,369,854)(7,660,128)Inventories(168,349)(2,946,896)Other assets(42,693)1,691,190Accounts payable and accrued liabilities(3,349,709)(1,213,060)Net cash provided by operating activities22,117,08234,077,072Cash Flow From Investing Activities:Short-term investments(9,990,389)-Equity investments-(2,588,200)Intangible asset purchases(3,539,000)(2,500,000)Purchases of property, plant and equipment(9,050,473)(4,086,775)Net cash used in investing activities(22,579,862)(9,174,975)Cash Flow From Financing Activities:Proceeds from exercise of options for common stock4,819,1848,979,217Cash settlement of share units(936,115)-Purchase of treasury stock(38,238,364)(12,384,771)Realized excess tax benefit11,767,442526,625Net cash used in financing activities(22,587,853)(2,878,929)Effect of exchange rate changes on cash and cash equivalents78,638(179,084)Net increase (decrease) in cash and cash equivalents(22,971,995)21,844,084Cash and cash equivalents at beginning of period120,708,57296,654,275Cash and cash equivalents at end of period
118,498,359 RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES(Unaudited)The following tables set forth the reconciliation between U.S. GAAP and our non-GAAP financial measures for net income and diluted income per share (unaudited): For the Thirteen Weeks EndedFor the Twenty-Six Weeks EndedOctober 25, 2013October 26, 2012October 25, 2013October 26, 2012Net income
21,641,937Gain on warrants' liability (1)-(1,327,686)-(1,327,686)Impairment of investment (2)---2,472,601Litigation settlement --4,776,075-Adjusted non-GAAP net income
22,786,852Diluted income per share
0.77Gain on warrants' liability (1)-(0.05)-(0.05)Impairment of investment (2)---0.09Litigation settlement --0.17-Adjusted non-GAAP diluted income per share (3)
Gain on warrants' liability with no tax effect.(2)
The impairment relates to our investment in the convertible debt instrument of NeuroVista, net of tax.(3)
Numbers may be affected by rounding. The following table sets forth the reconciliation between income from operations and adjusted non-GAAP income from operations (unaudited):For the Thirteen Weeks EndedFor the Twenty-Six Weeks EndedOctober 25, 2013October 26, 2012October 25, 2013October 26, 2012Income from operations
37,441,320Litigation settlement--7,442,847-Adjusted non-GAAP income from operations
37,441,320The following table sets forth the reconciliation between adjusted non-GAAP net income and our non-GAAP financial measure for adjusted EBITDA (unaudited):Adjusted non-GAAP net income
22,786,852Interest (income) expense, net(45,508)47,562(88,923)69,268Other expense, net40,782125,243171,47357,895Depreciation and amortization1,349,6281,194,4792,706,6292,317,587Equity based compensation2,595,8692,439,6555,749,3686,846,188Income tax expense – adjusted for non-GAAP items8,003,9027,761,92215,513,51414,527,305Adjusted EBITDA
|SOURCE Cyberonics, Inc.|
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